Norway: Selected Issues

September 17, 2018

Preview Citation

Format: Chicago

Norway: Selected Issues, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Summary

This Selected Issues paper describes wages and competitiveness in Norway. Norway may have to downwardly revise its expectations for wage growth if it is to avoid a significant loss of competitiveness and manage the transition to a less oil-dependent economy. Norway was able to afford very high wage growth in the past (notwithstanding the noted challenges in several sectors) thanks to good fortune in its terms of trade. Going forward, it would be prudent not to count on being fortunate twice: wage moderation would help build resilience in case of less favorable trends in international prices. It would also help facilitate the needed transition out of oil by supporting sectors that did not benefit from past terms of trade gains. Communication from the government can continue to help in managing public expectations. Fiscal policy plays a key role in promoting competitiveness and containing the spending effect of Dutch Disease. After a prolonged expansion of fiscal policy—partly enabled by large valuation gains of the sovereign wealth fund—it is now appropriate to gradually start tightening fiscal policy. The ongoing up-cycle provides an ideal setting to get started on structural consolidation, which will ultimately be needed to face to address aging pressures.

Subject: Asset bubbles, Asset prices, Financial crises, Housing, Housing prices, Labor, National accounts, Prices, Wages

Keywords: Asset bubbles, Asset prices, CR, Financial asset, GDP, Global, House price, Housing, Housing prices, IFNW signal, IMF staff estimate, ISCR, Mainland GDP, Norway, Terms of trade gain, Wages

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2018/280
Stock No:

1NOREA2018002
ISBN:

9781484377109
ISSN:

1934-7685

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